D.C. Tax Scam Mastermind Expanded Existing Ploy
Wednesday, September 17, 2008
The woman who masterminded the biggest embezzlement in D.C. government history inherited a scam running in the city's tax office and relied on a culture of mismanagement and corruption so entrenched that she escaped notice for almost 20 years.
Harriette M. Walters learned how to steal in the mid-1980s from co-workers whose swindling ran the gamut, prosecutors revealed yesterday. They took cash and gifts from property owners in return for erasing penalties on overdue taxes, stole refund checks issued to deceased taxpayers and created phony property tax refunds with little effort or worry.
Yesterday, Walters pleaded guilty, as expected, to wire fraud, money laundering and other charges in a rip-off she designed that netted her and her co-conspirators $48.1 million. She could face 15 to 18 years in prison.
Walters, 51, spent her millions on dozens of gambling excursions to Las Vegas and Atlantic City, a 2005 family vacation to Paris and lavish spending sprees at high-end stores with a personal shopper.
She shared the money with friends and family members who helped engineer the thefts. But she also showered largesse on the people who worked in the tax office. The woman known as "Mother Harriette" doled out $1.2 million in checks and an undetermined amount of cash to her fellow employees from 2001 until her arrest last year, prosecutors disclosed.
U.S. District Judge Emmet G. Sullivan wondered why Walters was not brought to justice long ago. "It strikes me as amazing that this criminal activity can go undetected for 20 years and nobody knew she was stealing," he said. "There were no checks and balances?"
Walters, who wore a blue jail jumpsuit and spoke firmly when answering Sullivan's questions, is the 10th person to plead guilty in the scheme. Two others, including her niece, Jayrece Turnbull, and Diane Gustus, a former tax office employee, have been charged.
Yesterday evening, prosecutors filed a motion seeking to dismiss the case against Gustus, whose attorney has proclaimed her innocence since her arrest last fall.
"We are extremely pleased by the decision and we commend the U.S. attorney's office for reaching a fair and appropriate conclusion," said her attorney, A. Scott Bolden.
In pleading guilty, Walters said she wanted to "take full responsibility" for what happened. "It will give me an opportunity to get out of prison and go home and see my family," she told Sullivan. "It also gives myself a chance to repay" what was stolen.
She agreed to make restitution and has consented to the forfeiture of houses in Washington, New Jersey and the Virgin Islands, as well as items including her Mercedes, collectible Barbie dolls, crystal vases and an Oriental rug.
Sullivan accepted the plea provisionally but said he might reject it after reading a pre-sentence report written by probation authorities. He said he did not believe the sentence of 15 to 18 years was enough for "the staggering loss."